Tourists Say Au Revoir to France

September 24, 2003

By Stephanie Trastour and Christina Passariello The square in front of Notre Dame Cathedral is hardly recognizable. The tourist buses have disappeared. The never-ending throngs that used to swarm outside the famous site are no more, and the lines of those waiting to be admitted are short. Good news for tourists, but not for Paris, which has suffered a 10% decline in foreign visitors so far this year.

It's just one sign of the very tough year French tourism is having. With 77 million visitors in 2002, France is the world's most popular tourist destination. This year, however, the French economy is flirting with recession, and the usually robust tourism industry, which generates $40 billion in revenue annually -- almost 7% of France's gross domestic product -- isn't taking up any of the slack.

A WORLD OF HURT. Everything from natural disasters to international politics is contributing to the slowdown. Forest fires have hurt business in the southeastern Riviera. Oil from the sunken tanker Prestige has blighted the beaches of the southwest for months. The stronger euro, a tense international climate, terrorism fears, and American anger over France's opposition to the invasion of Iraq are all factors.

While 2001 and 2002 were boom times, "2003 has been an exceptionally weak year so far," admits Leon Bertrand, the French Secretary of State for Tourism in his office on Paris's Left Bank.

France, always smugly confident about its appeal to travelers, is now scrambling to defend its position as world leader. A French tourism board TV ad that ran in the U.S. in May, featuring Woody Allen venerating French kisses and French fries, failed to strike a chord with American travelers. So Bertrand has launched a new economic package designed to boost tourism. His twin objectives: to maintain France's position as the top tourist destination and to increase the industry's profits.

HELPING HAND. Tourism-related development and construction will get tax breaks, and Bertrand also intends to pour far more money into marketing. The budget of Maison de la France, the association that promotes France as a vacation destination, will rise $4.6 million, or 40%, by yearend, and another $4.6 million for 2004.

Bertrand also wants to make life better for businesses that support French tourism. He plans to ease up on employment taxes for seasonal tourism outfits and offer tax advantages to encourage the purchase of second homes. In addition, he's offering tax breaks to help renovate tourist sites, especially in rural areas and France's overseas territories. Many of the huge hotels on the Cote d'Azur, for instance, haven't undergone serious upgrades since they were built in the 1970s. With a bit of cleaning up, made more affordable by tax incentives, they could compete for higher-end tourists.

Not everyone is behind Bertrand's measures. For one, the socialists who rule Paris City Hall want to democratize the industry and attract more budget travelers. "Paris is the capital for luxury and trade fairs," says Jean-Bernard Bros, Paris' deputy mayor for tourism. His goal is to make Paris, which attracts some 28 million visitors a year, more accessible to the youth market and groups from less affluent regions such as Eastern Europe.

BANNED BUSES. So far, however, Paris' left-leaning government has a mixed record in promoting tourism. Paris-Plage, a three-kilometer temporary beach along the Seine that was open from July 20 to Aug. 20, was a hands-down success, drawing more than 3 million visitors this summer, from tourists to Parisians who stayed home for the holidays.

However, Bros's office has also hurt tourism by banning tour buses from the city-center in order to avoid traffic congestion. Big tour operators such as Paris Vision are forced to drop off their groups in front of monuments such as the Eiffel Tower and then park their buses miles away. Bros insists that tourists can use boats on the Seine to get around.

Happily, the country's tourism does have one bright spot: The French are taking more brief holidays. But to preserve France's standing as the vacation spot of choice for everyone from lovers to wine aficionados, international visitors are key. And, for now, they're staying away in droves. Passariello and Trastour are editorial assistants at BusinessWeek's Paris bureau